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PERFORMANCE OF LEGAL DUTY

RESTATEMENT OF CONTRACTS | RESTATEMENT (SECOND) OF CONTRACTS | CONTRACT LAW | CASE LAW ON CONTRACTS

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RESTATEMENT (SECOND) OF CONTRACTS

CONSIDERATION

 

73. PERFORMANCE OF LEGAL DUTY

Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration; but a similar performance is consideration if it differs from what was required by the duty in a way which reflects more than a pretense of bargain.

Comments:

a. Rationale. A claim that the performance of a legal duty furnished consideration for a promise often raises a suspicion that the transaction was gratuitous or mistaken or unconscionable.

If the performance was not in fact bargained for and given in exchange for the promise, the case is not within this Section: in such cases there is no consideration under the rule stated in 71(1).  

Mistake, misrepresentation, duress, undue influence, or public policy may invalidate the transaction even though there is consideration....But the rule of this Section renders unnecessary any inquiry into the existence of such an invalidating cause, and denies enforcement to some promises which would otherwise be valid. Because of the likelihood that the promise was obtained by an express or implied threat to withhold performance of a legal duty, the promise does not have the presumptive social utility normally found in a bargain.

b. Public duties; torts and crimes. A legal duty may be owed to the promisor as a member of the public, as when the promisee is a public official. In such cases there is often no direct sanction available to a member of the public to compel performance of the duty, and the danger of express or implied threats to withhold performance affects public as well as private interests. A bargain by a public official to obtain private advantage for performing his duty is therefore unenforceable as against public policy.... And under this Section performance of the duty is not consideration for a promise.

The performance of legal duty is not consideration for a promise in any such case if the duty is owed to the promisor.....

. c. Contractual duty to the promisor. Legal remedies for breach of contract ordinarily involve delay and expense and rarely put the promisee in fully as good a position as voluntary performance.

It is therefore often to a promisee's advantage to offer a bonus to a recalcitrant promisor to induce performance without legal proceedings, and an unscrupulous promisor may threaten breach in order to obtain such a bonus. In extreme cases, a bargain for additional compensation under such circumstances may be voidable for duress. See 175-76. And the lack of social utility in such bargains provides what modern justification there is for the rule that performance of a contractual duty is not consideration for a new promise.

Slight variations of circumstance are commonly held to take a case out of the rule, particularly where the parties have made an equitable adjustment in the course of performance of a continuing contract, or where an impecunious debtor has paid part of his debt in satisfaction of the whole. See 89, 273-77. And in some states the rule has simply been repudiated.

 

It is therefore often to a promisee's advantage to offer a bonus to a recalcitrant promisor to induce performance without legal proceedings, and an unscrupulous promisor may threaten breach in order to obtain such a bonus. In extreme cases, a bargain for additional compensation under such circumstances may be voidable for duress. See 175-76. And the lack of social utility in such bargains provides what modern justification there is for the rule that performance of a contractual duty is not consideration for a new promise.

Slight variations of circumstance are commonly held to take a case out of the rule, particularly where the parties have made an equitable adjustment in the course of performance of a continuing contract, or where an impecunious debtor has paid part of his debt in satisfaction of the whole. See 89, 273-77. And in some states the rule has simply been repudiated.